Unit One: Chapter 19- Business Cycle

Business Cycle

Notes from (1/21/16)

Expansion- Where real GDP is increasing, which causes spending to increase, and unemployment decreases.

-A.K.A. Recovery Phase

Peak- The highest point of real GDP

-Lowest unemployment and greatest spending

Recession/Contraction- Where real GDP decreases for 6 months

-Increase in unemployment and a reduction in spending

Trough- Lowest point of real GDP

-Highest unemployment and least amount of spending

-Means the end of a recession

FACTS

1. Average cycle is 5-7 years
2. One cycle is from trough to trough
3. Recessions last about 14 months
4. Peaks and troughs are meaningless because we never know we're in one until it's over.
5. If a recession loses more than 10% of real GDP, then it is called a depression.

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